New Home Sales “Dismal” In Las Vegas
In Business Las Vegas reports from Nevada. “February’s new-home closings fell to their lowest point this decade as prices tumbled 5 percent from January, but the Las Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August, according to SalesTraq.”
“There were 1,441 new-home closings in February, a drop of nearly 50 percent from February 2006 and a decline of 30 percent from January’s 2,052. That’s the lowest monthly total this decade. In the resale market, the 2,594 homes sold in February was the lowest total since April 2001.”
“‘I think it’s always disappointing to see dismal results, and let’s face it, those sales figures are disappointing,’ said Las Vegas housing analyst Steve Bottfeld.”
“Bottfeld noted that home closing figures are a look at the past because it can take 60 to 180 days to close. None of the new numbers reflect the recent events in the subprime lending market in which it’s tougher for people with lower credit scores to obtain mortgages.”
“With the decline in home sales, prices came down in February with the median price at $321,555, a drop of 5 percent from January’s price of $339,253. The new-home price is the lowest since March 2006 when it was nearly $320,000.”
“The home prices don’t include the incentives that some builders are offering and have yet to disappear. Meritage Homes recently had a 48-hour weekend sale in which it was offering $60,000 in incentives for homes in Mountain’s Edge.”
“‘The next month or two will tell the tale of 2007, whether or not this is a real or false bottom,’ Bottfeld said.”
“The number of foreclosure filings jumped 24 percent between January and February, giving Nevada the nation’s highest foreclosure rate for the second consecutive month, according to RealtyTrac.”
“The 3,124 foreclosure filings in February were 77 percent higher than February 2006. Nevada has one foreclosure filing for every 278 households, which is three times the national average.”
“(The) National Association Of Home Builders said it expects single-family housing starts in Nevada to drop 28.5 percent in 2007, from 28,500 to 20,400.”
“‘The Las Vegas metro area turned in a similar performance (to Phoenix),’ the association said in its report. ‘Prices rose rapidly, the investor share doubled and housing starts climbed well above pre-boom levels. In 2005, the investor share of mortgage originations was over 20 percent, up from 9 percent in 2000. In 2006, Las Vegas joined Phoenix among the 20 largest housing market declines.’”
“NAHB Chief Economist David Seiders attributed the boom to an excess demand driven by low interest rates coupled with aggressive mortgage lending practices, a combination that…attracted speculators and investors. That in return put pressure on sales, prices and production that has resulted in corrections in 2006 and 2007.”
The Las Vegas Business Press. “All those ‘For Sale’ signs on houses across the valley are indicators of the glut of inventory facing both Clark County and the state. Until the residential market rebounds, local taxable sales could see more of what Applied Analysis Principal Brian Gordon termed ‘a decline.’”
“‘If we look at it on a per capita basis, it is a decline,’ he said of the Clark County number.”
“The state’s February employment numbers reflected an annual growth of about 32,500 jobs, which was around half of the number reported in each of the last three years, according to Gordon.”
“Gordon attributes the annual decline to a lagging housing market and a gap in major resort construction on the Strip. Planned projects, such as MGM Mirage’s Project CityCenter, Echelon Place, Encore and the Trump Tower are still too far off to have a significant impact on employment, Gordon says.”
“The decline in the residential sector has also impacted real estate brokers and agents, he continued. That job and income loss has been showing up in local spending figures. ‘It is significant. We have seen the amount of spending on taxable sales items is down on a per capita basis in Clark County,’ he explained. ‘Now we see it being reflected in the latest employment figures.’”
The Nevada Appeal. “Sales tax collections continued to lag behind projections used to build the budget for January. The slump in the housing and construction industries accounted for much of the problem. Sales of building materials and supplies fell 22.4 percent to $212.8 million. Furniture sales were down 60 percent to $89.3 million and taxable sales from building construction down 38 percent to $11.9 million.”
“Motor vehicle sales were off 10.8 percent to $434.7 million and food services and drinking establishments 16 percent to $592.6 million for the month.”
“Lyon County suffered a major drop in building materials sales from $5.6 million to $2.8 million and furniture sales went down 40 percent to $849,793. But Lyon’s amusement, gaming and recreation category also took a big hit in January as taxable sales fell from $1.3 million to $345,084. Overall the county was down more than 23 percent compared to the previous January.”
From KUTV 2 in Utah. “According to one research group, the state of Utah is the worst in the country when it comes to home mortgage fraud. In Utah for some reason people have fallen hard for mortgage fraud and the con men and women have gotten away with it.”
“Sean Anderson was sold on a deal to build a house and earn fast equity. ‘It sounded like a great deal,’ says Sean. ‘They hooked us up with the mortgage company, hooked us up with the appraisal, which came in at $464,000. And I built the house for $425,000.’”
“Sean was told he could use the equity to make the payments. What he didn’t know was the agent and lender used an inflated appraisal. ‘I can’t make the payments,’ says Sean. ‘There was no equity. Right now I’m into this over $100,000.’”
Today we got news that even Harley Davidson’s motor hogs are being financed with subprime loans: 20% of their hogs loans are subprime and the 30-day delinquency rate on such loans has increased from a 3.6% between Q1 of 2005 and Q2 of 2006 to 5.18% in Q4 of 2006, an almost doubling of delinquency rates in two quarters.
After I buy a house a a sane price maybe will pick up one of these hogs on sale.
LOL!
RE: After I buy a house a a sane price maybe will pick up one of these hogs on sale.
Unlike the johnny-come-lately lemmings who have been paying anywhere from $3500 to $5000.00 premiums over MSRP so they could join the Harley Hog party the last 5 years.
Fools and their money are soon parted.
“Fools and their money are soon parted..” –or– in the immortal words of Gordon Geko: “A fool and their money were lucky to get together in the first place!”
“Unlike the johnny-come-lately lemmings who have been paying anywhere from $3500 to $5000.00 premiums over MSRP so they could join the Harley Hog party the last 5 years.”
I think I’ve spotted a few of these dweebs riding. The ricochet of the suns rays off the new leather jacket is hard to ignore. Many still have the price tag dangling from the sleeve. They’re usually traveling at dangerously low speeds. Some dump their bikes at the stoplight and cannot even pick them back up. Others grab a handful of throttle and slide off the back of the new seat. The bike then shows up for sale with 100 miles on the odometer, and 10,000 miles worth of road rash.
I’ve been riding motorcycles (large sport bikes) for over 10 years (no accidents - 70,000 miles) now and I just don’t see what people see in Hardleys. They are underpowered, overweight, unreliable (much better in recent years but not compared to other brands) and waaaay over priced. They are nothing but a status symbol for posers trying to impress shallow people. There are plenty of other bikes out there that are much cheaper, more reliable, and have better performance. I’ll occasionally run into a real motorcyclist who owns a Hardley and they readily admit its not their favorite bike (they always own several) and most of them got one to fit in with their friends. Don’t mean to bag on those that like em but there is a definite Harley bubble thats been around for since the mid 90’s.
Those overaged Hog riders don’t look half as ridiculous as the crotch-rocket riders, hunched up like monkeys fornicating with a football. Then there’s the standard bimbos-on-back with even less clothes than brains. We really do need a better class of cyclists.
I agree there are a lot of stupid kids riding sport bikes but I that hunched up riding position is not as uncomfortable as it looks. I’ve done over 700 miles in a day during a 2000 mile 4 day trip on mine. Even with all the organ donors that ride sport bikes there is still a much larger percentage of sport bike riders that really know how to ride vs harly riders. And what do you have against bimbos with no clothes?
There’s posers in both camps, but Harley is the preferred choice of posers because they’re all about style over substance: big noisy bikes with lousy power, handling and brakes. All show and no go, but posers don’t care because they’re buying the image, not the ride.
That said, when I rode coast to coast on my Honda VFR, I did see some Harley riders out there touring (slowly).
The first work by the good doctor…
http://www.amazon.com/Hells-Angels-Hunter-S-Thompson/dp/0345410084
A good read.
Written on the men’s room wall in a bar in Red River, NM (presumably by someone who didn’t care for Harleys), “What’s the difference between a Harley and a vacuum? Where they attach the dirtbag.”
PT Barnum “Sucker Born Every Minute”
part of the NO SPILL OVER effect
I must be stououpid
Asset bubbles breed asset bubbles. Not only motorcycles have been inflated, but collector cars have been trading at insane prices too.
The plethora of “custom chopper” on TV drove a lot of demand, but also drove a lot of customers to other sources. You could always get better quality at lower prices from Japanese companies, but now customs are what the mass market dreams about. The high end buyers (with better credit) are probably drifting away from all factory cruisers.
When the Geezer Boomers tire of playing biker dress-up the prices will come down and HD will probably return to its earlier financial troubles.
Exactly like housing, save your money when assets are expensive. Buy when the mass of owners gets bored or starts to runs out of money.
When the Geezer Boomers tire of playing biker dress-up the prices will come down and HD will probably return to its earlier financial troubles.
and maybe they can try and develop a better muffler
“and maybe they can try and develop a better muffler.”
The sound of a Harley is one if its selling points. Harley even tried once to patent the throaty sound their engines make.
and maybe they can try and develop a better muffler
If you’re referring to those annoyingly loud pipes that some HD’s have, those are aftermarket add-ons. As far as I remember, manufacturers have a noise standard they have to adhere to, but once in the end buyer’s hands, if they want their bike to be stupid-loud, there’s not much stopping them from making it happen.
We were talking about boat prices too, sometime last week. We called it the “Toy Bubble”.
Used aircraft prices are also dropping thanks to a number of things. The light twin market is in shambles thanks mostly to $5.00 av gas. The higher end single engine market is doing ok because it’s experiencing a migration from the light twin ranks. Plus the people that can afford Bonanzas and Cessna 210s are probably the type of professionals who don’t experience much of a cycle in their business (doctors and lawyers). From the mid 1990s to last year, you couldn’t even bargain on a entry level single engine (Piper Warrior, Cessna 172, etc.) But now, sellers are very willing to bargain.
Hey Fedrule,
What’s a 172 with mid time engine going for these days?
I’d like to build a Vans or Lance Air one of these days. Ya its a lot of work but the performance to price ratio can’t be beat.
A few years ago this one would have had a buyer before it reached the market with this price and with these kind of times:
1978 CESSNA 172 SKYHAWK, , 1978 SKYHAWK XP, 2500-TT, 400-SFRM, NDH, recent paint- 9/10, new sheep skins, interior original, IFR equipped, dual Nav/Com, KLN89B, EDM700, Precise Flight standby vac. Excellent maint. $82,500.
I’d go with the Vans aircraft because it’s aluminum. Although I’m a fan of composites for aircraft, an aircraft entirely made of composites is going to have problems over time - especially in the desert areas. There’s just something more reassuring about having your airplane held together by good ole fashioned rivets instead of glue! I’ve known several Vans owners and all love them.
One more thought about the Cessna Skyhawk ad above…I haven’t been following the used airplane market for about two years but even as recently as then you had difficulty finding a low time, single engine four seater. Back in ‘99 and ‘00, the only four seaters you could find were the airplanes which were basically flight school airplanes. I would never touch one of those - and during the dot com boom and real estate boom that was all you could get. Cessna saw the demand coming and got back into the single engine business after having been out of it for 15 years. My brother bought a Baron last year and to this day he still has other brokers calling him to see if he’s still interested in his previous inquiries. If the light twin market is any indication of what’s ahead in real estate (and I think it is), then look for a virtual fall-off in prices once an identifiable stressor is reached. With the light twin market, it was avgas doubling and then going higher. I suspect for real estate the stressor will be the subprime implosion. Beech Barons that were going for $180K five years ago are now going for $110k and less.
Used RV prices are circling the drain, too. And only a few years ago, you’d pay more for a new RV than you would for a coach bus. LOL!
I have a class B … have thought about opening a tours/charter co as a second or third career. Have also though about RV’s/campers since unlike most of those mo-rons behind the wheel, I can actually drive one, heh heh.
Probably would go for a small one (maybe a popup) or a coach conversion, because I know an old MCI can drive (and I can get parts) but some of those retail RV’s look like they’d tip over in a stiff wind.
I’d loooooove to have an Eagle, but forget about repairs. Once transit agencies dump a bus, you know it’s headed for the museum.
Hmm, if I had a small RV, those shitty GMC mirrors would be the first thing to go. Truck mirrors for me!
Over-sized garages with central heating.
Those Gladiator shop cabinets.
How about those “zero-radius” mowers like the commercial guys use?
but now customs are what the mass market dreams
I have noticed two new Custom Bike Shops just open here in Santa Clarita, bad timing, ouch.
The economy is one big debt ponzi. refi your way to look wealthy.
BAAAWAHAHAHAHAHAHAHA!
We have reached the event horizon in the black hole that is Vegas housing. From Wikipedia:
“In general relativity, event horizon is a general term for a boundary in spacetime, defined with respect to an observer, beyond which events cannot affect the observer. Light emitted from inside the horizon can never reach the observer, and anything that passes through the horizon from the observer’s side is never seen again. A black hole is surrounded by an event horizon, for example.”
IOW, if you’ve gotten in, you can’t get out, and if you’re on the sidelines, all there is to do is watch.
“February’s new-home closings fell to their lowest point this decade as prices tumbled 5 percent from January, but the Las Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August, according to SalesTraq.”
How they he!! is housing starts increasing a silver lining???? That is just more empty houses to drive down prices even more….
Am I missing something here???????
the housing bears live in the sweet spot.
if they keep building, it bolsters our case. if they stop building, it just shows how bad the housing market is and leads to less jobs and less demand.
Kinda like “If you build it, they will come”.
Too many builders have been drinking supply side kool aid!
This made me LMAO!!!!
Home closings at 10yr low and new builds rising!!!!!
I just don’t get the allure of Vegas! I actually looked to moving there to take advantage of the coming RE collapse. Thought to purchase a buttload of these FB investments when they actually made sense as investments on a rental return basis.
The problem I saw was NO JOBS!!! The only real employer is the power grid from Hoover dam. All the other jobs are service for the casinos and construction.
The brutal summers topped off my decision to abandon the LV thoughts.
I am now applying for a position with the Army as an auditor in Hamburg. Thought that might be an interesting move for 3 years or more. The coming implosion in the US will not be fun or pretty no matter how your set up.
Vegas needs to go away…
Failed Gambler here (ex John Oakhurst)
I know the score.
Everything we’ve done the past decade has been gambling.
Look where it got us.
To the very edge.
“wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods”
That’s from Wikipedia.
Gambling has been an economic pyrrhic victory.
http://en.wikipedia.org/wiki/Pyrrhic_victory
Connect the dots.
no you are not missing a thing…..
Spin-maesters tell the public these things with the explanation, the the builders must be confident.
I love the “event horizon ” theory above.
Clearly the cat is NOW out of the bag about the weak economy in Las Vegas per the article above… If Detroit’s economy is the canary, Las Vegas swallowed it and has contracted a severe case of “bubble DEBT & fraud poisoning”!
News flash, casino win drop below also, editor musst have deleted that factoid.
OF the 40 planned high rise condo’s less than 2 handfuls will ever come out of the ground.
psst–Actually, it’s spelled “meister”, from the Yiddish, but your spelling amuses me.
Housing starts ROSE!??! Well, that’s going to be a quintuple screwing for the FBs, on top of falling prices, potential job loss, declining tax revenues (meaning property taxes will have to go up) and ARM resets.
I came up with the perfect analogy for anyone who bought in the last three years in Vegas, Phoenix or Miami. Imagine a hot curling iron shoved up your rear end, and slowly twisted. Now imagine this getting done to you all day, every day, for the next five years. It’ll hurt worse than that.
If they build it, equity locusts will come…
I’ve been thinking about the increase in starts and I wonder if the builders know something about longterm trends that they aren’t sharing with the rest of the class.
Imagine I’m a builder and I have a lot of land that I’ve already purchased, but didn’t start building on yet. If I think the market is in for a short drop and is coming right back (year or two), I’m going to sit tight and build when I can sell for a good price (and tout the stuff as new construction, etc.).
If I think the decline is going to be long and large, I might decide to thow something (anything) up on that land right now and try to sell it at a haircut from the top now and not at an even bigger haircut five years from now.
Does this make sense as an explanation of the new starts behavior, because I can’t think of any other reason for there to be record numbers of new home starts except these were previously existing contracts from a while ago.
The run up in Las Vegas has never made sense. There isn’t any water. Stupid place to put a big city.
Hmmm… or maybe they’re thinking in the extremely short term, like the next quarter. They’re all awash in cash still, so they can buy materials and labor, so that’s what they do. Actually selling the houses? They don’t get finished until September; who’s thinking THAT far ahead?
I think an alternative reason was given on this board a couple of days ago, and one I personally embraced. It is that the builders have agreed to fund a lot of infrastructure improvements in the area and the local governments have placed time limits on the improvement. Also, the gov. demanded the builders put up bonds that they would forfet if the work was not completed on time. As a result builders have money locked up in raw land, assurity bonds to local governments, and payment to other companies for the infrastructure improvements. With so much money already committed, they must generate cash coming in by building and selling the houses.
If this is indeed the case, then builders will need to keep building for years to come, even selling at a loss (as long as they can cover their variable cost on the housing material, or screwing over the subs), and the quality will be going downhill even faster.
If I think the decline is going to be long and large, I might decide to thow something (anything) up on that land right now and try to sell it at a haircut from the top now and not at an even bigger haircut five years from now.
Sounds like a prisoner’s dilemma for the builders.
My guess is that they are resigned to making less on margin, while also putting the squeeze to their subcontractors. Private and publically-traded builders won’t do nearly as well as they used to - but what’s the alternative? Try to sell your land at a loss? Cut your staff/crews by 80% and become a boutique builder or get into renovations/additions/improvements? (this option would be available to the smaller, private builder/developer). Or just pack it all in, retire, and spend your days with the fishing rod or 5-iron in your hand.
Margins will decrease, and new home inventory/pricing and inventives will continue to supress values across the board. Fun to watch.
Hmmmm…
It’s all good for us bears. It will help solve the low-income housing crisis, and we’ll have all the more choices to buy at the bottom.
Also, it’s probably better than public housing projects such as Cabrini-Green
Or Pruitt-Igoe…
http://en.wikipedia.org/wiki/Pruitt-Igoe
The part where they burn your innards is nothing. It’s the death from sepsis that really sucks.
HOGS SACRIFICED WITH MORTGAGE RESETS!!!!!!!!!!!!
The Street.com reports:
“Thirty-day delinquencies (and loss trends) in Harley-Davidson’s
receivables book offer a clear picture that credit-quality issues are
broadening… a pattern of deterioration that we first began to see in
subprime mortgage loans during the first half of 2006.
Harley-Davidson’s 30-Day Delinquencies
4Q2006 5.18%
3Q2006 4.46%
2Q2006 3.61%
1Q2006 3.69%
4Q2005 4.83%
3Q2005 4.07%
2Q2005 3.66%
1Q2005 3.60%
Source: Lehman Bros.
“…Harley’s finance subsidiary (HDFS) funded almost half of
Harley-Davidson’s motorcycle loans. Like subprime mortgage loans, HDFS’
hog loans are pooled and securitized to institutional buyers.
Unfortunately - in credit trends and terms - HDFS is also beginning to
look more and more like New Century…”
In reality you have to realize at the prices they are asking in order to get them off the showroom floors and into consumers hands. They would just about have to finance anyone. Same thing with cars. If it wasn’t for easy credit most of these companies would be out of business if you look at the pricing of the product. I often wonder how one justifies making a car or motocycle note of over a couple hundred bucks.
I know several individuals that have bought these two-wheeled Winnebagos. After some extra chrome and a few add ons the prices were over $40,000.00 each out the door. All were financed through Harley.
Our paper recently reported that the local Harley dealer is planning on adding another 50% of retail sales space to an already very large store.
I’ve been riding Harley-Davidson’s since 1976, and started buying their stock in 1989, which has been one of the top performers on the DOW for the last 20 years, bar none.
$10k invested in the IPO in ‘86 is worth like $1.2mil with splits and reinvested dividends.
I have no complaints, other than I having to put up with the myriad of posers who have given the MotorCo. the profits.
“‘I think it’s always disappointing to see dismal results, and let’s face it, those sales figures are disappointing,’ said Las Vegas housing analyst Steve Bottfeld.”
I don’t know this guy, but its looking harder for those in RE related jobs to put lipstick on this pig.
Yep. Note the only “good news” in these articles is about the increase in housing starts in an area that can least afford more inventory.
Note the only “good news” in these articles is about the increase in housing starts in an area that can least afford more inventory.
Good news for whom? I can’t imagine that is going to be good for anyone
Good news for prices…unless you’re a homeowner in the area-BWAHAHAHAHAHAHA!!!
Refinancing today is really restructuring of financial debt. Or rather, shifting one’s debt from one place (CC’ds, Car loans etc..) to the house.
An expensive way to do it if you ask me. Just closed on a transaction where the borrower refinanced and the pre-payment penalty to pay off existing home loan was just a sliver under $9000.00, not including pre-paids (taxes, insurance, etc.) and closing costs.
Business as usual in escrow land.
I prefer to think of it as debt surfing.
People shouldn’t be getting into $50K CC debt then they wouldn’t have to refi. A car loan should never last more than five years, preferably four.
Anyway, people never count repairs, upgrades, closing costs and realtor fees when counting how much money they “made” on their house.
We have to buy a car this summer. How do you get zero percent financing that they are always advertising? We always have paid cash, bit I like the idea of hanging onto the money.
I got a wad of cash and someone is going to pay dearly for my wait and lip biting listening to dunces boast of their real estate paper wealth. No much talk latley. LOL!
That’s right. I can’t wait to use my saved up Bozonian Bucks ™ to buy a foreclosed McMansion and boot the squatters onto the street on their asses, kids and all, hopefully in the snow.
Toddler: Mr, why are the sheriff’s deputies putting our furniture in the street?
Me: Because Mommy and Daddy lived beyond their means, mortgaged your future and by their stupidity in buying inflated real estate, raised the price for everyone making a bubble pop inevitable which will cause a depression which will make this country a third rate power in the 21st century.
Toddler: Can I watch Sponge Bob?
21st CENTURY….. How ironic.
That’s rich
Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August
inventory to the moon !!!!!!1
“The number of foreclosure filings jumped 24 percent between January and February, giving Nevada the nation’s highest foreclosure rate for the second consecutive month, according to RealtyTrac.”
I think states will be jumping over each other in the foreclosure rankings in 2007 the way buyers were overbidding each other for houses in 2005.
People are going to be lining up at 5am at the courthouse to foreclose
While I was on business today, I decided to take my favorite route back home. The route follows alongside the New River, and is (was) very scenic. I hadn’t been that way in a long time, and was shocked by all the development that had sprung up in the last few months along the river (I always thought the the New River, being declared a Scenic River, wouldn’t allow such tacky development. Boy, was I wrong! When I drove past a line of houses under construction, I was tempted to stop and ask the workers who the hell the developer planned to sell the houses to. But I didn’t, I just sadly drove on by, remembering when the area was just farm land.
Is that US 221? I like those backroads because they seem like they haven’t changed in 50 years. Until now, I guess.
No, Railroad Grade Road, between Fleetwood and Todd, but it is off of 221 north of Deep Gap.
OK, I was thinking of 221 up by the Virginia line, which goes along the New for a bit. I like 194 too. No one back there to bother you, although I did run into a cow on 194 once who wouldn’t move for two or three minutes
I was tempted to stop and ask the workers who the hell the developer planned to sell the houses to.
¿Se Habla Español?
Remember, those workers are Doing Jobs That Americans Won’t DoTM.
but the Las Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August, according to SalesTraq.”
I think what he meant was “Sliver Lining” Not “Silver Lining”
haha, “Have too many houses on sale?, Don’t worry we’ll make more!” Yep, that will dry up inventories……….
Geez
Build baby, build.
“NAHB Chief Economist David Seiders attributed the boom to an excess demand driven by low interest rates coupled with aggressive mortgage lending practices, a combination that…attracted speculators and investors. That in return put pressure on sales, prices and production that has resulted in corrections in 2006 and 2007.”
Glad to hear that Seiders has joined this blogs’ consensus view.
“Sean was told he could use the equity to make the payments. What he didn’t know was the agent and lender used an inflated appraisal. ‘I can’t make the payments,’ says Sean. ‘There was no equity. Right now I’m into this over $100,000.’”
Let’s face it, Sean’s a friggin idiot. end of story. time to flush turds like him once and for good
“Sean Anderson was sold on a deal to build a house and earn fast equity. ‘It sounded like a great deal,’ says Sean. ‘They hooked us up with the mortgage company, hooked us up with the appraisal, which came in at $464,000. And I built the house for $425,000.’”
Sean took the bait, the hook, the line, and the sinker. Yep, they hooked you up big time.
Because the appraisal was inflated, he can’t make the payments? Paying the darn loan has nothing to do with the appraisal!!! WTF?
I think the idea is that by the time he finished building the house, its value would have risen enough that he could take a home equity loan or refinance to get money out and use that to make payments for a while. Rinse. Repeat.
Might have worked for a while if he had done it in 2002.
“Sean Anderson was sold on a deal to build a house and earn fast equity….”
That’s what happens when you seek something FAST.
As the old saying goes, haste makes waste.
“There were 1,441 new-home closings in February”
What idiots are out there buying?! I think these people should be part of a panel for the comedy factory so we could all have a good laugh.
“Sales tax collections continued to lag behind projections used to build the budget for January. The slump in the housing and construction industries accounted for much of the problem. Sales of building materials and supplies fell 22.4 percent to $212.8 million. Furniture sales were down 60 percent to $89.3 million and taxable sales from building construction down 38 percent to $11.9 million.”
These are the true factors of the housing implosion. All the other data is being manipulated but sales and decline in sales taxes says the boat is sinking fast.
Here’s some good investment advice:
http://biz.yahoo.com/brn/070329/21526.html?.v=1&.pf=real-estate
buy real estate now!
This loser quotes Dave Ramsey but leaves out the first bit of advice that DR always gives to real estate investors: you make your money at the buy. In other words, if you can’t get a heavily discounted price, you won’t get positive cash flow from the property so don’t buy it. I think this wanker just copied & pasted a bunch of Dave Ramsey snippets and pulled them in out of context. I could be wrong, but DR is a disciple of the “live within your means” mantra and wouldn’t support the flippers and FBs we read about every day. In fact, every day at least 5-6 FBs call his show asking what to do about their 5 properties they can’t rent out. His advice - cut the price and sell.
Ramsey always stresses positive cashflow on all rental properties, that includes the HOA, taxes and repairs. I’ve heard many a FB call in with a dozen rental properties all negative cashflow. Ramsey always warns that most people in RE go broke at least once.
“The number of foreclosure filings jumped 24 percent between January and February, giving Nevada the nation’s highest foreclosure rate for the second consecutive month, according to RealtyTrac.”
Woo Hoo!! We’re number one! We’re number one! Oh wait, that’s not really something to be proud of… Unfortunately, I don’t think it’s going to get better any time soon.
The flippers (specuvestors, rehabbers, et al) are really starting to cook. And I see countless rehab projects still in the works which won’t be ready until late spring/summer at the earliest. With falling prices, there is no hope for many of these guys. They simply paid WAY too much for the property, and then are overspending on the rehab as well. There’s no way out.
“The number of foreclosure filings jumped 24 percent between January and February, giving Nevada the nation’s highest foreclosure rate for the second consecutive month, according to RealtyTrac.”
Woo Hoo!! We’re number one! We’re number one! Oh wait, that’s not really something to be proud of… Unfortunately, I don’t think it’s going to get better any time soon.
I swear I only pressed the button once…blogger gremlins must be about.
Contact bounce.
What a difference now in LV and AZ from the summer of 2004 when I looked at many new house developments and saw the insanity of speculation
and concluded that this will crash, so I will wait until sanity returns some day and just rent. We are not quite there yet. Maybe I will look at getting into the Hog repo business while I wait.
“All those ‘For Sale’ signs on houses across the valley are indicators of the glut of inventory facing both Clark County and the state. Until the residential market rebounds, local taxable sales could see more of what Applied Analysis Principal Brian Gordon termed ‘a decline.’”
“Termed a decline//!!” It’s sure hard for these guys to state the obvious!
And if the current trend continues, Brian Gordon will term the recent buyers ’screwed’.
“Sean was told he could use the equity to make the payments. What he didn’t know was the agent and lender used an inflated appraisal.
Guy thought it made perfectly good sense to use home equity to make his mortgage payment and he thinks that the problem lies in an over-inflated appraisal! Another fine candidate for a Federal FB bailout.
“new-home closings fell to their lowest point this decade as prices tumbled 5 percent from January, but the Las Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August”
hmmm, sales down prices down, what to do what to do? build more!
I don’t remember being taught in Econ 101 that the answer to too much inventory was to add more supply.
Mina
“All those ‘For Sale’ signs on houses across the valley are indicators of the glut of inventory facing both Clark County and the state. Until the residential market rebounds, local taxable sales could see more of what Applied Analysis Principal Brian Gordon termed ‘a decline.’”
Remember, it’s a new paradigm.
If I were a builder with land that I had written off as a loss, I would think “hmmm. Prices are dropping, but are sticking… Better build as fast as I can as long as I can sell for more than the cost of building, and sell, and get out” They might be able to move their houses by seriously undercutting the market.
“closings fell to their lowest point this decade as prices tumbled 5 percent from January, but the Las Vegas housing industry had a bit of a silver lining as housing starts reached their highest level since August”
Build build build, cheap homes for everyone!
Utah is the mortgage fraud headquarters.
Is that any surprise? Utah is home to some of the most crooked companies in the nation. Not just mortgage companies.
Why is that? With all the Mormoms you would think it is more honest.
As you can see, the reality is just the opposite.
I’ll take Fairbanks for $100, Alex!
You would think.
“Be nice” is the unofficial Utah motto. They’ve refined the concept of sugary-sweet niceness there to weapons-grade levels. Seriiously — if you could figure a way to ferment the Utah atmosphere, you’d get enough ethanol to gas up every car Detroit ever made.
The problem is Nice’s ditzy twin sister Gullible. The two are inseparable. When your environment is thoroughly Nice, you get blindsided by the first guy who looks and sounds Nice — but isn’t.
Certainly more trusting.
“Why is that? With all the Mormoms you would think it is more honest.”
Two of the biggest fallacies concerning human nature are the assumptions that religious beliefs and wealth positively correlate to character. No, people, they don’t. As anyone who’s lived in a high-income neighborhood with feral neighbors could tell you. As could any defense attorney, who’ll tell you that nearly all of their criminal clientele are emphatically religious. Since our prisons are full of religious criminals, it stands to reason our businesses and neighborhoods are, too.
This afternoon I saw a house with a for sale sign in the front yard and the price too. $218,000.The house is very close to a busy street,
the yard was weedy and burnt out and the house needed painting.
Looked like a 3/2. Not worth 1/2 the price.
Desparation setting in.
“‘The next month or two will tell the tale of 2007, whether or not this is a real or false bottom,’ Bottfeld said.”
I’m developing a pet peeve about this statement, which one can find “experts” making in article after article after article after article on this blog, going back months or more.
It’s always the next month or two that will set the trend. Next month, we will know more. They never say “last month set the trend and it’s all downhill from here”.
I guess it’s just something they say to fill space, like sports commentators saying the team has to score more points if they want to win. Still, it gets on my nerves.
I’m with you - I don’t get it. Prices dropped 5% from the previous month. How can he call that any type of bottom (real or false)? Wouldn’t you need prices to at least be flat M-O-M to even be able to make this kind of statement? And, I can take away the suspense, this is definitely not the bottom for Vegas, so no need to wait for stats from the next month or two.
Las Vegas. More houses being built. More houses becoming empty. Less houses being sold. Am I missing something or has the world of math been changed?
Oh! I think I see what this is all about in Vegas. It’s a new 24 cent slot machine game. Get three cherries up in one of the casinos and instead of winning a bucket of quarters you win a house!
Madison Equity has enough! :
http://www.bakersfieldbubble.blogspot.com/
I haven’t quite figured out what the draw is here in Northern Nevada. The upper desert sucks - it is not nearly as beautiful as anywhere in Arizona. The mountains look nice but it isn’t too peaceful listening to the never ending traffic up at the lake. In winter, my choice of roads to go see my family is dictated by the weather. Yet the locals think this is the greatest place on Earth. ‘It’s so great here’, they say. I say it’s so expensive here. Gas is as high as Southern-California. Groceries are more expensive. Try buying anything organic and you will receive sticker shock. Jobs are not plentiful. Good paying jobs require being married or related to someone, and are usually found only in the matriarchal state-government sector. Culture (except for possibly in-breeding) is almost non-existent. Oh and all those wonderful activities … I don’t ski, fish, drink, smoke, gamble, snort meth, or hang out with prostitutes. Did I mention that there isn’t any service oriented business that can’t be made worse by locating here? I mean, this place even screws up In and Out burger. (I didn’t even think it was possible). Anyway, just because you can pick up a house cheaper than the Bay Area is not the best criteria for relocating. I have attempted to live here since late 2000 – sadly, I now think I am stuck here for awhile. All I can say is: it’s really really different here.
Where are you? Reno? At least you are near Tahoe.
Carson City - Close to Tahoe - but far from civilization…
I would think Reno is better as I have been there many times. Kinda of a fun place to visit with the casinos for a few days. But Reno is still a small town compared to Sac or the SF Bay Area.
The Sierra Nevada is in your shadow…
Go pay a visit. Drive around 100 miles south of CC and it starts getting breathtaking, just from the road.
If you’re feeling a little more adventurous, take a hike somewhere. Endless possibilities.
You hit it on the nail. Only thing you missed is the grafitti popping up everywhere from the transplanted delinquents.
I was on another RE blog last night and I noticed something very interesting. They were saying that foreclosures count as a sale because the lender buys back the property for their deed price according to the county.
Everything seemed legit the way it was being explained. I need to find that link to post here. Just wondering if anyone else knows this to be true?
Because the numbers for this county were increased by 10% due to foreclosures being bundled in as sales. Also, the median was affected because it records as a sale with the original 1st mortgage deed amount showing up.
Please contribute if you know this to be true or false.
thanks-
Stevo
Stevo,
I think that this may be correct. Of course, whoever compiles the statistics makes the decisions, so we know which way the NAR will go.
I went to the foreclosure auction for my home (I rent from an F’dB) and the bank provided the opening bid. Nobody bid more (more than a dozen foreclosures, and nobody was even there). Going once, twice, sold for tha banks bid.
Now they want me out. Offered $500 and said get bent on my deposit.
Paul
I live in Skamania county in Washington state, where folks normally have a 29 minute commute to get to a job, any job. I believe roughly 70% of the folks in the county have to commute out to work, thanks to the National Scenic Area. At any rate, they are still building houses out here. I have no idea why as no one in this place seems to make enough money to buy a Unabomber shack, let alone a McMansion. I’m waiting to see if they really start building the latest development or if the printing just starts to fade off the sign.
I think the builder still has a large profit margin by historical standards, though it dropped from Super Large magin 2 years ago.
This is why they are still building, with the anticipation that they can sell 10% below the existing owner and still make a good profit, given construction materials have fallen off the cliff.
Bingo… builders have more leverage with subs, material costs are down, and profit margins were obsene over the past few years. If prices hold steady, they will still make a profit… unfortunately there are too many builders thinking the same thing and flooding the market with inventory. Prices won’t hold steady.
I also think there is substantial arrogance among many builders who have only been in the business for the past 5-10 years and have never seen a downturn. Kind of like a kid swimming downstream thinking “I’m one heck of a strong swimmer, I’m flying down this river” and then suddenly with a waterfall ahead find themselves having to swim upstream to reach the shore. Now we’ll see who can really swim.
Bill Hocker, branch manager at Countrywide Home Loans in Waldorf, said the buyers’ market that has been created means ‘‘this is probably the most opportunistic time in our industry to buy a home — ever.”
actually the most IDIOTIC TIME
Why own a Hog?????
They last forever, at least the old ones.
The 59 knucklehead I have owned for 30 years runs great, So does my 65 full dresser. The technology is very old but it is sooooo simple. Anyone can maintain and repair them. When is the last time you saw a Honda 350 or 750 from the 60s??? They sold millions here in the US. All in the junk yard now.
I never even see Japanese bikes from the 70s and 80s here in California, and
Hondas from the 90s are all looking sad.
Finally: Experienced riders want a real load muffler so the car drivers know you are there. “I didn’t see you in my rear view mirror , but I sire heard you.
When you blast my ears so many times I lose my hearing, I won’t be hearing anything, “sire”.
I’ve never had any trouble seeing motorcycles (well, once I got past the teenage sucks-at-driving stage). I’ve heard that some american cars have really bad visibility. Maybe they should regulate visibility. Or maybe you should start wearing a helmet. But destroying my hearing means I get LESS of a sensory impression of the road, not more.
I have a ‘72 CB500 4 cyl. that sits in the rain, and isn’t used. I bought it for 375.00.
I charge the battery, change the gas, and vroom!
I am kinda worried that it’ll break at speed though.
paul
On Swedish TV national news governmen channel today they had a report from Las Vegas. The topic was how great it is there because the workers have unionized unlike other parts of the US. They interviewed a hispanic hotel cleaner who was showing off her nice house.
Ahem….. methinks it is not quite the unionized hotel wage that enabled the house purchase….. maybe subprime mortgage…..
I have lived in Vegas for over a year and been looking to buy a house waiting for prices to come down to earth but with all bad news houses still expensive here and I have not seen much price change for last 10 months.. my rent is up soon I have decided to move to a bigger apartment instead of buy inflatted house hopping prices come down next 12 months.
A friend from high school is a RE agent in Las Vegas. At our reunion in ‘05, I asked him what his plans were for work when the boom ended.
He sneered with just a touch of contempt, “Dude, I’ve been doing this for five years. Real Estate is the $hit. You need to get off of your butt..etc.”
I tried to mention that his five years experience coincided pretty tightly with the boom, but I couldn’t get past the sneer.
He called me the other day, asking to use me as a reference for his app to the LV Metro Police.
Oh yeah,
He also mention that if real estate went south, he’d focus on refi’s. I asked how many refi’s he could do in an increasing interest rate environment.
Some how the conversation moved on to another subject.
Paul